Thursday , March 21, 2019

A Walmart Win And Burgeoning ISV Transactions Buoy First Data’s Expectations

Processing giant First Data Corp. said on Monday Walmart Inc. has added Star signature debit acceptance to its roster of payment options. The company also noted that its integrated payments business continues to grow. Both observations came during the Atlanta-based company’s first-quarter earnings call with equity analysts.

For the quarter, First Data’s revenue of $2.3 billion decreased 17.8% from $2.8 billion in the first quarter of 2017, but its profit blossomed. It posted a $134 million profit in the first quarter, compared with $79 million a year ago, for a 69.6% increase.

Bisignano: “Overall, we’re pleased with Clover’s progress building our position in the integrated-payments space.”

Walmart’s addition of Star signature debit is noteworthy because it demonstrates the product is viable for large and small businesses, chief executive Frank Bisignano told analysts. The Star electronic funds transfer network is part of First Data’s Network and Security Solutions unit, which had first-quarter revenue of $362 million, a 7% increase from $340 million.

First Data also has high expectations for its integrated payments business, which is led by its Clover point-of-sale system. “We continue to see impressive expansion,” Bisignano said. “We’re now processing $58 billion in annual volume globally on Clover.” First Data purchased Clover in 2012. “Overall, we’re pleased with Clover’s progress building our position in the integrated-payments space,” Bisignano added.

First Data announced in 2017 that it intended to grow its independent software vendor-related business. It purchased CardConnect Corp.  and BluePay Holdings Inc. as part of that effort.

First Data has made “great strides” in the integration of the two companies, Bisignano said. “The revenue growth trajectory of our ISV business is very strong.”

Bisignano said Clover is coming to Germany and he anticipates other international markets. “Clover is really becoming a platform we believed it would be,” he said. Clover is part of First Data’s Global Business Solutions division, its merchant processing unit, which had revenue of $1.3 billion, an 18.2% increase from $1.1 billion a year ago. The bulk of that —$1 billion—came from North America sales.

Big drivers of that business were First Data’s partner solutions and direct sales. Its joint-venture business, which includes The PNC Financial Services Group Inc., Bank of America Corp., and Wells Fargo & Co., performed in line with expectations. This business line has been lagging, but First Data said it is “poised for growth.”

“The joint ventures are gradually improving,” Bisignano said. First Data plans to make digitized merchant signup and onboarding available to its joint-venture partners, said Himanshu Patel, chief financial officer.

In other First Data results, the company continued to whittle away at its debt. Its total debt decreased by $186 million to $19 billion from $19.2 billion at the end of 2017.

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